SCUP Report

Table of Contents

Abstract

Most rubber-processing chemicals are older products and are consumed predominantly in the manufacture of automotive tires. Because of increasing consolidation in the tire industry, the major tire manufacturers are in a strong position to demand low prices for rubber-processing chemicals while still maintaining the demand for high quality, product improvements, efficient delivery and strong technical support. Environmental issues are an ongoing concern that could force producers of rubber-processing chemicals to upgrade manufacturing facilities and develop less hazardous products.

These factors have led to an extended period of low profits in the rubber-processing chemicals industry. The industry response has been global consolidation, to achieve more efficient economies of scale in both manufacturing and business operations. The major international competitors are Chemtura, Flexsys and LANXESS, which are gaining share over smaller, regional producers.

The following pie chart shows world consumption of rubber-processing chemicals:

As this report was being written, the North American economies were experiencing what observers claim to be the worst economic downturn since the Great Depression of the 1930s. While opinions vary widely as to the timing of the economic recovery, many commentators opine that most industries have experienced a structure shift. While these discussions are beyond the scope of this report, in developing our forecasts, we have chosen an economic scenario in which the North American industries exhibit a period of stagnation, followed by a gradual expansion to previously historical growth rates. While conservative, the resulting product consumption forecasts do not represent the "worst case scenario," but are believed to provide a realistic base for planning purposes. The profitability of the industry as a whole has been in doubt for several years, and the cost of meeting environmental requirements has had a major impact. In the area of government regulations, specific chemicals used as accelerators and shortstops are undergoing changes because of the formation of carcinogenic stable nitrosamines from some of these chemicals.

European rubber manufacturers have been facing increasing competition with products from emerging markets such as China, which has incited the sector to focus its production on high-tech and sophisticated products. The backward integration displayed (i.e., by some tire manufacturers) has put significant pressure on suppliers of rubber chemicals. Several synthetic rubber producers manufacture some of their own chemicals.

In Western Europe, the rubber-processing chemicals industry is mature, with mature products and well-established suppliers and customers, and exhibits a declining trend as the result of a reduction in both production and consumption of rubber in this region. Demand on a volume basis during 2008–2013 is expected to continue to decline, at an average annual rate of –1.0%. A slightly slower rate of decline is expected for antidegradants than for accelerators. There is little new product introduction. Among accelerators, use of primary amine–based sulfenamides, such as N-cyclohexyl-2-benzothiazole sulfenamide, and thiazoles, such as 2-mercaptobenzothiazole, has been promoted because these products are not considered to be a primary source of stable N-nitrosamines, a potential health hazard. There is an ongoing effort to understand and decrease the causes of allergic reactions to rubber. Among rubber-processing chemicals, accelerators have been connected most with such allergic reactions.

Since the early 1990s, the major accelerators used in the Japanese tire industry have been N-cyclohexyl-benzothiazole sulfenamide (CBS), N-t-butyl-2-benzothiazyl sulfenamide (TBBS), and benzothiazyl-2-cyclohexyl sulfenamide (DCBS). The largest-volume antidegradant used in tires is 6PPD, followed by dihydroquinolines, mainly TMQ. Japanese consumption of rubber-processing chemicals during 2005–2008 grew at an average annual rate of 1.7%. The Japanese market for rubber-processing chemicals was good until late 2008; the economy slowed in 2009 (probably a 20% drop), but is expected to recover gradually to 2013. The average annual growth rate between 2008 and 2013 is expected to be negative (–1%), but there will be ups and downs in the market.

China became a net exporter of rubber-processing chemicals in 2005. Production (especially of accelerators) exceeding domestic demand is one of the primary factors that stimulated exports. In 2008, exports of rubber-processing chemicals declined as a result of the global economic downturn.